Deposits still covered

Six institutions are withdrawing from the Government's deposit guarantee scheme but their deposits will still be covered until the expiry of the scheme in October.

The Treasury announced the six just before Christmas: Aotearoa Credit Union, Asset Finance, Christchurch Emergency Services Credit Union, Farmers Mutual Finance, Mutual Credit Finance and Rockforte Finance.

All institutions in the scheme were required to accept revised deeds or stop offering guaranteed deposits after December 31, 2009. The Crown deeds of guarantee for the six will be withdrawn, effective from January 1, 2010.

About $84 million of existing investments and deposits with those institutions will still be guaranteed by the Crown until the earlier of the date that the investments or deposits become payable or October 12, 2010 because they were made before the withdrawal of the Crown deeds of guarantee.

New deposits or investments (including rollovers of existing investments or deposits) made with the six institutions on or after January 1, 2010 will not be guaranteed by the Crown.

Replacement deeds have been sent to the 63 institutions that continue to take part in the retail deposit guarantee scheme. The replacement deeds come into effect for new and rolled over deposits from January 1, 2010. In total, the retail deposit guarantee scheme guarantees $130 billion of deposits.

Full details are on the Treasury website.

A key change in the replacement deeds is that from January 1, 2010, deposit-taking institutions that have signed replacement deeds can choose to issue investments or take deposits on a non-guaranteed basis, if they wish.

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